>>trace: they were debating running against each other because of a change in the primary rules and i will have a full report. here for shepard smith today and neil cavuto starts right now. >>neil: on the verge of falling off a cliff not any word on avoiding a certain crash. all the bush rate going, all the automatic spending cuts coming and the real immediate threat no one is discussing: december 31, this is no laughing matter, we smirk, you decide. if both sides keep kissing off this issue, kiss this economy goodbye. welcome, everyone, i am neil

cavuto, downgrade, anyone? stock market crash, anyone? a recession, anyone? don't laugh, to hear even the most optimistic economist tell it, if we don't do something at the end of the year there goes any hope of a sustained recovery. don't just take my word for it but take your boss' word, a third of manufacturers will put off hiring because of it and 83 percent see a stalemate if their business if washington does nothing. now, my guest has a message for washington. get off your ass and do it. it is amazing, jim, they are whistling past the graveyard. they are not even doing that. they are not saying anything about it. >>guest: this is the big of the failure of american politics as the great depression. we are operating without a debt, operating against the debt ceiling ready to hit and now putting in the biggest tax increase in this country's

history in a weak economy that is growing at 1.3 percent. people are saying, well, they will get it fixed but it is already having an impact. businesses have already put off hiring. businesses have all right cut off capital spending. it is having an impact right new. there is another irony involved here, the federal reserve board made it clear they are trying to boost the stock market, they are trying to get asset prices higher, so what congress doing? they want to jump the dividend tax rate from 15 percent to 43 percent in the top bracket. this is money that has already been taxed. they want to raise capital gains taxes. this is on top of all the other tax increases that are set in three months. the notion this is going to be fixed is laughable because it is already having an impact. >>neil: here is what is laughable to me if the argument for extending the rates on the upper income for another year is

that was not the environment to raise taxes on folks, and our economy is actually performing worse than it was back then, in other words, the g.m. -- g.d.p. growth is below what it was then, why do we entertain it? >>guest: it is back to the argument raising tax rates increases revenues. democrat argue it raises revenues but it has hurt revenues because hiring is put off. >>neil: what is going to happen if none of this is addressed? say we back this up to the 31st of december. i agree, the markets are so far not priced in the possibility we have this happen but the closer we get to the deadline with no action, i system they will get a little bit more anxious. >>guest: if obama is

re-elected, what you will see is the likelihood that the fiscal cliff challenge will be very, very high. what that means, if you have a stock, you can sell it this year and pay 15 percent capital gain or wait until january 1 and sell it and pay 20 percent capital gain. people are going to sell their stocks now. if you have dividend stocks right now, you are paying cash at 15 percent rate. that jumped up to 43 percent. there is no reason to wait if it looks like the fiscal cliff increases are going to be intact. if obama is re-elect asked we have a mixed congress we will have a big fight on our hands and you will see a negative reaction in the stock market for those reasons alone. fought to mention the fact that businesses off budget in october and they cannot budget now. they put off their budget like the congress, reacting to congress. they can fought get a budget done because they don't know what the rules are. this is having a huge negative

impact on the u.s. economy and it is all right the most sadistic tax code in the word. >>neil: the twin hits will be substantial. a pox on both parties for bringing it to the brink. thank you very much. is congress just trying to wait this thing out until the election results are in? it has south carolina congressman very worried. you have said time is awasting and it is up to both parties to put something together. it doesn't look like they will ahead of the election, and maybe because they think maybe republicans think if romney were elected, maybe embolden by a republican senate they might be able to put a deal together more of their liking and democrats waiting out to re-elect rebound, much the same thing but that limits the amount of time they can do anything, right? >>guest: absolutely. no doubt about it. we find ourselves in dire straits right now.

the bottom line is the house of representatives has actedded. it must be clear. on sequestration, the house of representatives has acted. on the country tax code, the house of representatives has actedded. on the passing of the budget, we passed a budget last two years. the senate has not taken up a budget in 1,200 days. >>neil: congressman, the fact of the matter is, you and your colleagues agreed to the sequestration rules if everything broke down it was, what i like to call your back up backbone, not you, personally, but the argument that everyone would agree to this and now, now, now when it look like we are on the brink and no one wants it and now the cuts seem too draconian but which could be hell to pay if you then removed the sequestration and have in backup plan, the markets will thing you guys are a joke. right? >>guest: well, your last guest said it so well.

he said simply that companies are responding to the inactivity of congress. one of the reasons we want ahead and made the decision to replace sequestration is because companies do not act in 30 or 60 days. we have to have a business land -- plan that goes three and five years out. >>neil: but you had a plan and it was called sequestration. congressman, you had a plan. it was so-called sequestration and now you don't like that. >>guest: that is why i voted against it. >>neil: congressman, there was a plan on the table. i understand you do not like the land maybe you thought the day would never come where you use it, but now congress is backing away from backbone. >>guest: i must concede there is no doubt that there is plenty of blame to go on both sides without any question. the reason i voted against this last august is because this was apparently going to come out. this was the reality of something called a super

committee. the bottom line is this: the house of representatives decided to go ahead and act. we decided it was very important to give certainty and predictability to the job creators of america by saying to them, here is your tax code. give us 12 months to replace this current tax code and give them something that is business friendly that tells middle class americans they have will lower taxes. that is a good plan. we need to find a partner in the senate to bring something back. >>neil: congressman, what do you think happens? do you put together a deal that extended everything for six months and hash it out? what do you think will happen? >>guest: well, my gut tells me there will be a plan that extends the current tax code in some form or fashion for about a year to allow regular order to work through the house of representatives and senate to come up with a plan that replaces the country tax code with something that is more

business friendly and helps to encourage the middle class to do more saving and, also, greater investment in the marketplace. >>neil: we are planning a special live in washington this weekend to talk about what are you doing and the congressman came on to talk about it. very few others are but that will not stop us. you may have heard about the attempt of a space jump on sunday, forget about that jump because we are jumping into the deep-sea with able and willing politicians to talk to us. or not. if you have not noticed, folks, i have something to show you, a country to save.

we are going head first into a question that washington, dc, has ignored so we are live on the "countdown to catastrophe," kicking off at 10:00 a.m., with stakes this high and your money at risk we felt it is incumbent not to work bankers' hours. we are work over time with grover norquist and pat buchanan and what this triggers if they ignore the triggers. it could ruin your holiday but it could ruin this entire shaky economy. say it ain't so, you really didn't know, joe? maybe you should have caught a hearing the day before, joe, because these folks said they warned you and your boss. p.s., they are on eye team, joe.

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>>neil: doubling down on denial. that is how the romney campaign is spinning this. >> we were not told they wanted more security. we did not know they wanted more security. at time, we were told exactly, we said exactly what the intelligence community told us that they knew. >>neil: wait, then what about this? >> did you participate in any way, shape or form in requests for additional personnel in libya? and what was the consequence of the requests? >> yes. what you were saying is there wasn't sufficient resources provided considering the escalating and coming together of what could have been a catastrophic attack s that a fair phrasing? >>guest: that is a main reason i continued to ask for the

resources. >>neil: now, my guest on the terror take away from the debate. this is the author of a fiction book that is like the reality in the middle east today. what is interesting, you have the vice president saying no one warned us about this or was asking for beefed up security the day after security officials were confirming they had, indeed, been doing that. so, who is on first here? >>guest: well, the vice president clearly was telling a lie last night. there is no other way to candy coat it. remember, this is president obama's war meaning libya. libya is his war. he decided that he did not want qadaffi, qadaffi was a bad guy, no one is disagreeing with that. he is the one who has created the situation. we have on record 12 to 13 difficulty requests for security so, for the vice president to sit there and, by the way, i

think he is supposed to be our international specialist and guru he looked ignorant and fool in. i would also ask, i would like to ask him personally, because these are my guys that got killed. this is my ambassador. those were my seals. and my special operation guys that were killed. i want to know, mr. vice president, what did you find so funny last night that you sat there when congressman ryan tried to broach that subject. >>neil: wayne, what about this whole idea of getting the information out there? the vice president was say there is an investigation going on, we are looking into this and it would seem easy to release all cables that were out there. i can understand some that could be sensitive but if we already know that the ambassador stevens requested in the diary talked

about concerns for his safety and those in the compound, i don't think it is a leap to assume that he conveyed that to the state department by cables or that sort of thing. so where are the cables? >>guest: that is exactly right. we foe how to do this. we know how to go behind closed doors. we would like to think we know how to keep secrets but that doesn't always seem to be the case. the ambassador was absolutely concerned, as was his security detail, and, again, this is the president's war. we have the president the united states and his administration, opening up negotiations with our number one, arguably, enemy there, the muslim brotherhood. we have requests for security which they will not give yet our guys in paris seem to get all of the security they want.

>>neil: they were blaming that on republicans. >>guest: well, of course, of course, it is very easy to blame the republicans. that is nonsense. it's any descriptive word you want to use. i just think that for the vice president to turn around and same in the same breath that iran and not have a delivery system, that goes miles to tell the american people that not only is he totally in another world and disconnected but the administration back what he said because no one has backed away from that statement since last night. you are left with two choices, he lied or he is not important enough to influence so, either way it is damning indict. thank you, win simmons.

your book is a chilling parallel to what is going on in the middle east. a sobering wake-up call. >>guest: thank you for having me. >>neil: he looked up to jack kemp and was a vice presidential candidate just like jack kemp, did paul ryan debate like jack concern in we will ask the son of jack kemp. that is next. ♪ [ male announcer ] start with a simple idea. think. drink coffee. design something totally original. do it again. that's good. call in the engineers. call in the car guys. call in the nerds. build arototype. mold it. shape it. love it. give it a starting price under 16 grand. take it to the track. tweak. tweak. tweak. stop. take it to the car shows. call the critics. call the marketing team. get a celebrity endorser. he's perfect. i am? [ male announcer ] yes, you are. making a groundbreaking car -- it's that easy.

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>>neil: does this remind you of anything? does it remind you of this? >> get real. roosevelt said in 1932, the only thing we have to fear is fear

itself. the only thing they had to offer was fear. >>neil: polls were split back then but the vice presidential candidate jack kemp lost that vice presidential debate. the polls are split on the big debate last night but many arguing that paul ryan lost that debate. i think they are far too split and far too varied to make that consensus then or now but now to jimmy kemp on the comparisons. his late great dad passed away a couple of years ago. what did you make of paul ryan? many, because he was an apostle of your fathers he loved your dad and, lated and admired your dad, the comparisons were unavoidable. >>guest: i think paul has invited the comparisons.

he show as profile of what a v should look like: serious, in command of the issues, lights hearted. it was a great light of the mistakes that vice president biden has had with verbal gaffes. but he was very respectful of the vice president, he was very serious about the issues and the ideas and the choice the country has. paul ryan understands that to order to earn people's vote which, by the way, he did a wonderful job in the closing remarks of asking american citizens to vote for governor romney and himself, but he is providing the ideas and the path forward that is responsible and deals with the realities that exist in a sober minded relic way and it was quite a contrast to vice president biden who was emotional and you have heard it

time and time again. he was laughing too much. >>neil: that is where the comparison stopped. say what you will of al gore when he and your dad was debating he because not snickering but that was before the famous al gore sigh with george bush but both your dad and then vice president gore had a substantive discussion of the issues. we can debate back and forth who resonated. we know who won the election that year but i wonder whether you think it was becoming of a vice president or vice presidential candidate do act that way to smile and joke and laugh like that. >>guest: the american people are hunkering for politicians who care about the country before they do their own political prospects. as you know, neil, paul ryan has been willing to take risks to

put ideas forward that will move the country ahead. frankly, i think the vice president was laying politics. i agree with you, i don't think the polls that say the debate was split, i don't think they reflect what happened and the way i think there are many undecided people in this country. i disagree with other polls that say that everyone's mind is decided. people are just focusing. the game has begun. we got through the first quarter with the first two debates. we have two more for governor romney and rebound and you have the final week of the election. we are entering the last part of the first half and the momentum is in the right place. congressman ryan did a great job keeping the momentum going and romney and ryan have a land and vision for the country for the future. it is based on reapplying our

american principles which is what my dad believes in so deep ly. we believe it is important. >> loose tongues sink ships but did joe's slip of the tongue sink his boss? you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech.

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>>neil: do any you remember this? governor, do you have a minute to talk? you are getting good reaction to the speech. >> i feel good. >> did you expect the reception you got? >> i expect a lot of enthusiasm for the president and his agenda. >> how about the backbone comment. what were you trying to say? >> we have to be about our values which are central person values, central to the american character, stand up for that and we win were we citizen to win. >> governor, you say the party should embrace what it stands for not step away. did that message resonate? >>guest: i don't think i said that. >>neil: the backbone comment. did that register? a lost delegates said it did. do you think it registered? >> i hope so. >>neil: you feel good? >> that was high big moment. every big democrat last night

remembered that and hunkered down with me. >> at least let us preserve the middle class tax cuts for those making under $250,000. >>neil: you mention a million? >>guest: several illustration illustrations, he used different illustrations. >>neil: he was not telegraphing a change. can i ask you a style question? >>guest: i am not good on style. >> the president has acknowledged that he needed to engage. here is clear on that. >>guest: everyone has their own style and approach. >>neil: the smiling thing. biden has nice teach, a great smile. he sent a message to the president. >>guest: joe biden is joe biden and the president will be clear in drawing the distinctions. >>neil: if it is 2-1 more red

than blue what do we make of it? >>guest: the democrats are emphasizing quality over quantity. >>neil: very good answer. >> so the big of the names in the room coming to the number one program in business news on the fox business network. we always have the best for you and looking out for you, our special coverage of the next two debates, no one is looking out for you and your pun like us. to the tax hike issue that is taxing the white house right now. you her the vice president say this. >> the middle class will make less and those making a million and more will contribute more. >> we cannot afford $800 billion going to people making a minimum a million. they do not need it. >>neil: what about the times his boss said this? >> i am ready to make sure the taxes are fought raised by a single dime on your family's first $250,000 of income.

>> $250,000. >> $250,000 of income. >> $250,000. >> $250,000 of any family income . >>neil: i am confused: $250,000 or a million. my guest says this could be part of a political game for votes. >>governor huckabee: facts? who cares, $250,000, $1 million? innation is tough. this is amazing. people with a straight face who will flatout lie and tell us things they have to know are not ever close to true. is there a vat joy? if you are going to raise taxes and you frame it that you are only going after the $1 million crowd, but you are going after the $250,000 it just sounds better? >>governor huckabee: it could sound better, millionaires and billionaires and owners of

right jets, the irony is, the biggest focus of obama this past week has en on big bird the big bird is a millionaire. the merchandising of the characters makes $139 million a year with $455 million federal subsidy the shear a bailout to a company that doesn't really need it helping a millionaire who doesn't pay taxes because it is part of a nonprofit group, it is a good gig. we need to be focused on that. nothing is more important than a fictitious bird, right? >>neil: i was thinking of big bird, and i thought, well, wait a minute, are they trying to frame this in a way that it is millionaires who are hitting, not people who are less than millionaires? the president and governor romney be in ohio the most highly taxed regions of the country and a lot of folks in that area, $250,000 is not

millionaire and billionaire territory. so, maybe this part of a grander strategy. am i giving the vice president too much credit if. >> they may try to change the numbers. this administration has been dishonest. did you hear what yes biden said last night about athletes? i don't know if he had a bump on the head or wasn't aware that cardinal dough land had meetings with, supposedly, him and the president, got assurance this would be an accommodation and that was repealed and there was no accommodation and that is why the catholics, along with evangelical churches are actually suing the federal government. that was ridiculous attacking the integrity of the catholic church to say, no, they are just making this stuff up. they are not. the catholic church has nothing to gain by sewering the federaly suing the federal government. he had two catholic guys doing

the debate, maybe they should have had a moderator be a nun and she would whack him when they were interrupting. >>neil: paul ryan may not have laid into the vice president as hard as some republicans would have liked but on fox business network sarah palin certainly did last night. >> we would rather have 50 million super seniors determine how their medicare is delivered them than the bureaucrats in. >> i heard that death panel argument from sarah palin. >> how many vice presidential debates have there been in four years? this is only number two. what paul ryan was talking about, the panel of 15 bureaucrats who will make life-and-death decisions on coverage rather than doctors and patients having a relationship to make our own decisions about the coverage we would like, joe biden highlighted that and i

want to talk about why we cannot afor these death panels or anything else part of obamacare. >>neil: the woman who before sarah palin coined the phrase was warning about this, you have always argued the panels are alive and well. >>guest: this entire health law is a death panel. it takes away care seniors need to stay alive taking the future medicare funding over the next decade by slashing what hospitals and dialysis centers and doctors and are paid to care for seniors. cuts to senior pay for more than half of the law and the entitlements for people under age 65, one example: hospitals will have $247 billion less money to care for the same number of seniors as as if the law did not pass so nurses will

be spread thinner and wait if treatment and higher death rates. we know from the second evidence that seniors treated in low-spending hospitals have a 15 percent higher risk dying from the heart attack that brought them to the hospital. >>neil: 30 million more people coming into the system means people are going to be waiting for certain equipment, you name it. >>guest: but the cuts in this law will force 15 percent of hospitals to possibly stop taking medicare. where will the seniors go? almost half of hops will be forced to operate in the red providing skimpy care meaning lower survival rates for elderly parents in the hospital. we need health insurance reform to make sure the uninsured are covered. taking this money out of medicare to cover the uninsured,

that is not reform, that is murder. seniors will not be able to survive with that kind care. >>neil: what did you make of congressman ryan's analogy it was akin to the administration digging into a piggy bank to fund obamacare in was it an effective response? >>guest: it was on point. what this law does is problem grandma to spread the wealth taking the money out of medicare to fund entitlements for people under age 65 including an expansion of medicaid. the worrisome proposals just started last week, october 1, the administration began offering bonus points to hospitals to spend the least, the least, per seniors and whamming them for providing care after the patient leaves the hospital such as physical therapy if you have had a hip replacement. that is just deadly for seniors.

>>neil: thank you, former lieutenant of for of the fine state of new york. >> the states are changing and the bet is on. >> i will bet you a whole carton of chunky monkey. larry sabato is next. [ male announcer ] don't miss endless shrimp, just $14.99! try as much as y like, anyway you like. like new teriyaki grilled shrimp. offer ends soon! my name is angela trapp, and i sea food differently.

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>> this is likely to be a very close election. how close? we don't know. when we say "close" in midsummer it will not be obvious who will win and often it is very serious. >>neil: i think you are wrong. you have done this your entire life and i read a prompter and this election will not be close, young man the i will bet you a whole carton of chunky monkey. of course, larry sabato is

pre-ordering his chunky monkey. larry, what is going on here? what is shifting this race? >>guest: well, it is still close and competitive. i hold to every word i said in the summer and i want you to know i have been losing weight in anticipation of eating all the chunky monkey. >>neil: now what you are saying here is with very little trouble and if mitt romney were to do just as well in the next two debates he could be siphoning votes away from the president and not just in relatively small pool of uncommitted voters and undecided voters and clobber the president. >>guest: i think it is more a matter of enthusing the base. that is what he did in denver. they said, my god, that is what

we have been waiting for. it was a combination of romney doing terribly and obama turning in a historically awful performance. it would be more a matter moving a half step and not voting, finding something else to do on election day. that is the alternate that will keep it close, competitive and me in chunky monkey. >>neil: let's look where we think we stand. some states are shifting back-and-forth but to remind folks you need 270 electoral votes to become president of the united states. by your math we are look at a president who still has senator more than -- seven more than is necessary. >>guest: as of today. at one point he was at 290 when

he did better before the first debate. we have done two things that hurt him and helped romney. one is, virginia, which was originally leaning to obama, now it is one of our total toss ups with colorado, new hampshire, virginia, toss ups and we took the giant state of florida, 29 electoral votes, absolutely essential for romney, and we have put it in his column for the first time. it is close in the polls but things are moving in his direction. we have always had north carolina in his column. >>neil: what about pennsylvania? >>guest: it could be competitive. we have not moved that. that is leaning obama and the same with michigan. if i see more evidence it is becoming competitive we will take it into account but i don't want to encourage you. >>neil: it has to be a big box, by the way, of chunky monkey. >>guest: i know what you expect and neither of us needs

any chunky monkey. >>neil: professor, thank you very much. in the meantime, moms and big bird and how they are showing exactly what is wrong with washington right now. we explain. you decide. chances are, you're not made of money, so don't overpay for motorcycle insurance. geico, see how much you could save. c'mon, michael! get in the game! [ male announcer ] don't have the hops for hoops with your buddies? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t.

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>>neil: it is a balance of sacred cows from the g.o.p. defending defense spending to democrats trying to save big bird, we have seen it at both debates and we are seeing it in races across the country. >> under president obama there has been $500 billion taken out of the military and sequestration going into affect that is another $500 billion which are draconian cuts that hurt our ability to protect the national security and the last

few weeks have shown this is a very dangerous world. >>neil: that was ted cruz the republican senate candidate in texas with me yesterday in kentucky. now, fair and balanced, the democratic challenger. where do you, sir, see this race ultimately decided, not your own, in general, if you had to distinguish between parties right now. how do you look at it? >>guest: well, between myself and mr. cruz it is a very different background. i have legislative experience, i have passed major pieces of legislation in this state and i am the more -- he wants to get rid of the i.r.s., i will support social security and medicare and medicaid and that the difference. he wants to for wholesale changes to the programs. >>neil: you don't think the

programs need changing? >>guest: i think that there are things we can to do sure up the programs and continue the programs, yes. >>neil: like what? >>guest: well, there are a number of things. one is obviously, restore the framework of social security to the 90 percent level of funding through income. we are now at 83 percent or 84 percent. you can adjust the cost of living standard. you can also over a very long time period of time increase the retirement age a month at a time over a year. those things make social security valid and good through the future. >>neil: what is interesting, those are great ideas. >>guest: they are not hard to go. >>neil: neither party is making them. beyond just your race in texas, sir, why is it so difficult for the two sides to come to agreement to save some of the entitlement programs for future

generations in as you know the way things are going, whether you are republican or democrat, the money will not be there at the rate we are going. you come up with a number of great ideas, your opponent had a number of pretty good ideas, you are not that far apart on ways to keep the american staples ongoing, what stops in washington? why does it freeze? >>guest: well, request know, that is a good question. you are seeing it right new with the end of the year coming on. you have spending cuts that have to be made and you have a rescission on the bush tax cuts. nothing says you can't do one without the other but ego. >>neil: are you raising for raising the amount on the upper income let all the rates continue except for those in the upper income? >>guest: i don't like the tax debate going on in this country from either side. both sides are being divisive. >>neil: are you for that?

do you think that rates for the upper income should be raised? >>guest: i think the national debt and the deficits we are facing are all of our problems. all of us add americans should participate. >>neil: i know that. i want to be clear. yes-or-no on raising some people's taxes like the wealthy. >>guest: i think you have to raise revenue in order to solve the national debt problem. i think of an approach that buys in all americans is better than simply one group pitted against the other. i don't think you raise taxes just on the wealthy. i don't think you raise taxes just on middle income. this is a shared responsibility that we have. to we talk about it in terms of being talked about today we divide each other. this is our shared responsibility in this country. it should be united, a united effort not divided. the debate now it is one american against another. i don't think that is the right way to do it. >>neil: thank you very much. >>guest: to be clear, i think

we have to raise revenue to deal with the national debt. everyone that has looked at it knows that, we have to cut spending. >>neil: thank you very much. >> a nobel prize for this? no wonder debt is being celebrated around the world! everyone in the nicu, all the nurses wanted to watch him when he was there 118 days. everything that you thought was important to you changes in light of having a child that needs you every moment.

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